Russia: GDP growth to help steel sector recover

Russia’s gross domestic product (GDP) growth, domestic demand recovery, higher steel prices and the stabilization in consumer confidence will help strengthen the country’s steel industry in 2017-2018, Moody’s said in a report on October 25.

“We expect that steel demand in Russia will remain healthy on the back of the continuing GDP recovery, while average steel prices will stay fairly high and confidence among producers and consumers will stabilize as suggested by the raised PMI. Combined, these factors underpin our stable outlook for the Russian steel sector over the next 12-18 months,” Artyom Frolov, vice president and senior credit officer at Moody’s, said.

Steelmakers’ profitability will stay high even with a stronger ruble, due to higher steel prices, a sustainable year-average domestic price premium and continuing operating enhancements, which reduce costs, the report said.

“While anti-dumping measures imposed by the E.U. and the U.S. on some steel imports from Russia have, so far, had only a modest effect on steelmakers’ earnings, the risk remains that duties will be expanded across export markets and various types of steel products,” Moody’s also said. (Prime/Ukrainian metal)